Mr Lennon said Tasmania had locked up 40 per cent of its landmass in reserves and parks for the exemption, which Mr Howard should restore.

Mr Lennon has indicated the State Government will not appeal the decision because it would only extend the action and not end the uncertainty.

He is "optimistic" Mr Howard will amend the law and possibly the RFA to protect forestry and farming jobs.

"We can't have a situation in Tasmania where 10,000 families and their livelihoods are put at risk," he said.

The Forest Industries Association of Tasmania predicted the decision could even impact on tourism which depends on the state's natural wilderness.

FIAT chief executive Terry Edwards said the state and federal governments had to act urgently to restore wood-supply certainty.

He said the decision had undermined the intent of the RFA and jeopardised $1 billion of industry investment and 10,000 jobs.

"We call on both governments to reinstate the original intent of the RFA and to take whatever actions are necessary to ensure the principles agreed upon by them in negotiating that agreement are honoured," he said.

Senator Brown predicted any legislative change would "enhance and accelerate the extinction of species".

"If they do this in an election year, they do this at their own peril," he said.

Forestry Tasmania and the state and federal governments have until February 9 to appeal the decision.